Janet, we have a problem. The Fed's main policy transmission channel, since stock ownership is not widespread enough to affect the real economy's expectations, is via home equity wealth creation and animal spirit exuberance-based borrowing and leverage. As the following chart shows, the much-touted "housing recovery" pillar of the economy - that is set to take off and lift growth to escape velocity - is only evident in one place...
[4]
As Janet herself opined recently, [5] the poor better hurry and get rich so they can buy the $1 million homes and see price appreciation...
And move to The West!!
And, while everyone assumes it is the "rich" who are flipping homes and transacting like drunken sailors at a hooker convention, the fact is that the bulk of transactions in America are in the $100k to $500k range...
[6]
Which as is clear above, are losing 'value' this year.
* * *
Obama, Yellen - we are going to need a bigger stimulus plan - cash-for-clunker-houses?